It was about the Christmas season at Shining Time Station. It is just filled with people trying to catch trains to take them to see their families. Even Schemer (Brian O'Connor) is in a good mood, because Indian Valley committee is putting on a Christmas pageant and he is almost certain to get the part of Santa's helper. The kids, Matt (Jason Woliner) and Tanya (Nicole Leach), write letters to Santa Claus and Mr. Conductor (Ringo Starr) sends them on their way. He then tells the kids the story of the time Thomas the Tank Engine met Terence the Tractor:
One day, Thomas met a tractor named Terence. Thomas commented on how ugly Terence's wheels were, but Terence told him they were caterpillars that could take him anywhere. Before long, the snow falls. Thomas hated his snow plow so he didn't wear it. He didn't get very far before he got stuck in a snow pile. Luckily, Terence came by and towed Thomas free. After that, Thomas was more sensible.
An old man, Mr. Nicholas (Lloyd Bridges), entered the station and immediately knew everything about Stacy Jones (Didi Conn) from when she was a little girl. He was here to catch the Northern Star, a train that didn't run on that railway, but Mr. Nicholas was confident it would come. Meanwhile, Stacy invites Vickie, a bratty little girl, to the station. Matt and Tanya dislike her because of her attitude. She meets Mr. Nicholas who teaches her to be nice to people and it soon begins to work; Schemer's mommy made him a Santa's helper costume and he began his campaign against Stacy by telling Midge Smoot (Bobo Lewis), J.B. King (Mart Hulswit) and the Mayor untrue things about her. Mr. Conductor tells the kids another story from the Island of Sodor:
Mrs. Kindly, an old friend of Thomas' who lived by the railway, had once stopped Thomas just in time before he got into a nasty accident and Thomas realized the other engines: Gordon, James, Henry, Edward and Percy have never thanked her properly so Thomas proposes they throw a Christmas party, but then Sir Topham Hatt had bad news: Mrs. Kindly was snowed in and had to be rescued, so Thomas, Toby and Percy head out to do just that and are successful and when they return to the shed, they have their Christmas party!
Mr. Nicholas (if you haven't figured it out by now, he is Santa Claus) is still waiting for the Northern Star and to everybody's surprise, it comes! Meanwhile, everybody was fighting over the part of Santa's helper but Vickie breaks them up by singing a beautiful song. So it turns out to be a merry Christmas after all. Starr's Conductor character left Shining Time as he went with Santa to the North Pole.